Colombo District’s suburbs recorded an average 20% jump in land prices, with Piliyandala up 16%, and Athurugiriya and Homagama both rising 14%.
In contrast, Colombo 1-15 saw a more moderate 7% increase. Beachfront properties in southern coastal areas are also in high demand, with average asking prices reaching Rs. 2 million per perch, driven by tourism and foreign buyer interest.
Sri Lanka’s real estate market is showing signs of recovery in 2025, supported by economic stabilisation and lower interest rates.
According to the latest ‘Real Estate Market Outlook Report 2025’ by LankaPropertyWeb (LPW), land prices in the Western Province have risen by an average of 12% year-on-year, with suburban areas seeing the sharpest increases.
The residential apartment market is stabilising after years of volatility. Urban apartment prices increased between 0.2% and 2.8%, while suburban areas saw rises of up to 2.9%.
Rental prices remain steady, particularly in high-end segments, reflecting sustained demand. With 37,000 existing units and 8,200 more expected by 2027, supply remains strong, especially for three-bedroom apartments. Overseas buyers account for 27.7% of search traffic, indicating continued foreign interest.
Suburban housing demand is growing, with Malabe, Homagama, and Athurugiriya attracting buyers due to improved infrastructure and lower prices.
Residential properties in Colombo 1-15 start at Rs. 60 million, while suburban homes begin around Rs. 20 million. Rental yields average 3.5%, with monthly rents typically above Rs. 25,000.
Lower borrowing costs are supporting the market. After a 7.75% cut to the Central Bank’s policy rate, home loans now average around 10%, making property more accessible for middle-income buyers.
LankaPropertyWeb Managing Director Daham Gunaratna noted that 25 new developments launched in the past year, adding over 2,500 units, while delayed projects from 2020-2023 have delivered 3,600 apartments.
With rising land prices, a stabilising apartment market, and improved financing, Sri Lanka’s real estate sector is entering a phase of cautious optimism and long-term growth.